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Politics : Welcome to Slider's Dugout

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From: SliderOnTheBlack	9/17/2007 7:34:36 AM
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The LIE… Billion dollar black box blow ups from Goldman Sachs to BNP Paribas. Over 150 U.S. Mortgage lenders vaporized. A derivatives meltdown with mortgage backed securities now selling for pennies on the dollar. And bank runs from Calabasas California to London England… Yet global stock markets have handled it all, as if it’s just another speed bump. And smart money? Billionaire after billionaire, from the old guard of Buffet, Soros, Ichan, Hank Greenberg and Eli Broad to young turks like Eddie Lampert and Ken Griffin… they’re all stepping into the seeming abyss and loading up on distressed assets. So what do they know that you don’t? What’s caused the global markets and especially the U.S. market, to seemingly defy gravity? Why don’t the fundamentals of finance and credit matter any more? What force could be so powerful to propel markets higher into this chaos and madness? The answer? …a LIE. But, not a lie as you think it to be. Not a lie…as in an “untruth.” Rather a LIE that is an acronym for a formula. A formula so powerful it controls both men and markets. And here it is… L + I + E = V/DOM Liquidity + Intervention + Exports = Value/Direction of Markets. Liquidity… as in money supply. Money supply that is growing at double digit rates at 18 of the 20 largest central banks. Liquidity as in Yen-Carry Trade. Intervention… Both the Fed and the ECB have injected monetary steroids into the markets and the U.S. Fed now stands ready to cut rates. Cooperation among global central banks has never been greater. The BOJ and the ECB are now in pause mode. And even though Japan is under great pressure from its trading partners to raise rates, it is intervening in markets to keep the Yen weak, in order to refuel the Yen-carry trade and reflate global stock markets. Exports… Central bankers are expanding their money supplies at double digit rates to devalue their currencies in an effort to keep them from rising too fast against the collapsing US dollar… in order to protect their exporters. Exports are fueling global markets from Brazil to China. And given 45% of U.S. S&P earnings now come from abroad… a weaker U.S. Dollar not only chips away at the deficit, it lines the pockets of U.S. multi-national corporations. So now you know – what they know. And now you know – why the markets have seemingly defied both gravity and common sense. SOTB PS: Sometimes patience is not only a virtue… it’s a prerequisite for profitability. It was with gold stocks - now wasn't it? And it will be with this madness as well. PPS: You may want to revisit one of my favorite quotes on trading: ”Never interrupt your enemy when he is making a mistake.” -- Napoleon Bonaparte PPPS: Next weekend (my weekends extend into Monday mornings by the way (vbg)... part duex on "The LIE." And thanks & kudos to "G.D." and "M.C." for their origination of and work on "the formula." It's worked so far...but, tomorrow is always another day. More later...on that... next week. .

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